3. Fabina borrows 12,500 at 12% per annum for 3 years at simple interest and Radha borrows the same amount for the same time period at 10% per annum compounded annually. Who pays more interest and by how much?
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Answer:
Rs.362.5
Step-by-step explanation:
P=12500
R=12%
T=3
SI=PRT/100
=12500*12*3/100
=4500
CI=P[(1+r/100)^t-1]
=12500[1+12/100)^3-1]
=12500[(11/10)^3-1]
=12500(1331/1000-1000)
=12500(331/1000)
=4137.5
SI>CI by Rs.362.5
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